Warren Buffett has built a folksy, populist public image, but one of his companies has been exploiting people with deceptive sales and predatory loans. A breathtaking investigative report reveals that Clayton Homes, Inc. has been deliberately pushing minorities into high-priced loans, costing people their livelihoods and even their homes.1

The report claims that Clayton, which is owned by Buffett’s Berkshire Hathaway, misleads consumers about their lending options, charges African-Americans, Latinos, and Native Americans higher interest rates, and tricks them into signing loan documents that don’t match the terms they were promised. It also details a shockingly racist corporate culture that included throwing racist stereotypes at borrowers, tolerating racial slurs, and firing Black workers who complained.2

A group of progressive champions in Congress, including Reps. Maxine Waters and Keith Ellison, is jumping into action.3 They have demanded that the Department of Justice and the Consumer Financial Protection Bureau explain what they are doing to stop and punish this racist exploitation, and we need to show that thousands of Americans stand with them and with Clayton’s victims.

Warren Buffett bought Clayton 12 years ago. In the years since, it has become the single biggest homebuilder in the United State, and the biggest in the manufactured home business. Its in-house mortgage lender, Vanderbilt, finances more loans than any other lender by far. As the company has increasingly come under fire for its debt collection tactics – including harassing borrowers, insulting them, and encouraging them to sell blood to pay debts – Warren Buffett has personally promoted Clayton and defended it from criticism.4

But if reports are true, at least some of what Clayton has done “was illegal.”5 The company has been accused of:

Charging minorities higher rates. Latino, African-American, and Native American borrowers are charged higher interest rates than white borrowers. The trend is true even when income is factored in. In fact, “Vanderbilt typically charges black people who make over $75,000 a year slightly more than white people who make only $35,000.”6

Tricking people into taking out loans from its own company. Clayton gets away with charging more in part because its salespeople tell customers that the company’s in-house lender, Vanderbilt, is their only option – in violation of federal law. In fact, the company internally tracks the “capture rate” of customers forced into Vanderbilt loans, and uses it to evaluate the performance of dealerships.7

Rushing people into signing rotten documents without translation. Clayton advertises itself as friendly to Spanish and other non-English speakers, with spokespeople who promise friendly terms in customers’ native languages. But when it comes time to sign, the company presents documents in English – over the objection of some of its employees – and the incomprehensible loan papers can spell out terms that are far more expensive than what the customer was promised.8

Clayton sells its homes at such an outrageous markup that it still makes money even if borrowers are unable to pay and quickly default.9 The Americans who buy homes from Clayton can end up paying more than is fair, trapped in debt, and losing their homes and life savings in the process. That’s no way to treat people who have worked hard and saved for a home of their own, and we need to stand with the progressive champions in Congress who are fighting back.

Buffett’s company has attacked the investigative report, issuing a long list of misleading rebuttals that do not match the fact reported. It even claimed that its salespeople never insist that Vanderbilt is the only financing option available, despite the reporters catching salespeople on tape doing just that. The reporters responded in detail, noting how they company is trying to massage the numbers to save its image.10

If the company is taking the same deceptive stance to questions from regulators, it will take political pressure to force the Department of Justice and the Consumer Financial Protection Bureau to hold Clayton’s feet to the fire and bring down punishments for lawbreaking. That’s where we come in – we need to show that we stand with the progressive members of the House who are speaking up.